Agency
In Rhode Island, a seller's agent discovers that the seller has failed to disclose a known flooding problem. The agent should:
AIgnore it because loyalty to the seller is paramount
BDisclose the material defect to the buyer and advise the seller to update the disclosure✓ Correct
CList the property at a lower price to account for the defect
DCancel the listing immediately
Explanation
An agent who knows of an undisclosed material defect must disclose it and advise the seller to correct the disclosure. The agent cannot participate in concealing material defects from buyers.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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